Special Leave Petn. (C) No. 11954 of 1997 - Dated:- 9-7-1997 - K. Ramaswamy and D.P. Wadhwa, JJ. For the Appellant: L.R. Singh, B.W. Vaidya and Gopal Singh, Advs ORDER K. Ramaswamy, J. 1. This special leave petition has come up directly, from the award of the Central Government Industrial Tribunal No. 2, Bombay, made on August 9, 1996 in Reference No. CGIT-2/26/91. 2. Delay condoned. 3. The admitted position is that the petitioner-Association, representing five dismissed employees, had sought re .....

39;. It, therefore, has no jurisdiction to adjudicate the dispute. Prabhadevi Exchange had a total strength of 3000 employees of the Telecommunication Department, working in three shifts. As per the Administrative Instructions issued by the Government, for the first shift there should be a '3A' type canteen, for the second shift 'A' type canteen and for the third shift there should be 'C' type canteen. It was averred that for Type '3A' canteen, there should be 57 .....

Therefore, they sought reinstatement into service with full back wages and with continuity of service. The respondents, on the other hand, contended that the employees working in the canteen are not 'workmen' within the definition of Section 2(s) of the Act nor is the respondent an 'industry' under Section 2(j). They are "treated as holding civil posts in. the Central Government". They were paid monthly salaries devised by the Canteen Committee depending upon the incre .....

five workmen. In view of a judgment of this Court, non-statutory canteen employees are entitled to the benefit of the recommendations of Third and Fourth Pay Commissions. The Director of Canteen accordingly directed the Department concerned to pay the canteen employees wages as per the recommendations of the Pay Commission. Departmental Canteen, it is contended by the management, is not an 'industry' as per the Memorandum dated January 12, 1982 of the Director (Welfare), Indian Posts and .....

ntrary to the judgment of this Court in Bangalore Water Supply & Sewerage Board v: R. Rajappa (1978)ILLJ349SC The judgment, therefore, in Joseph's case is not correct in law. When its correctness was questioned in another case, notice was issued. It is, therefore, contended that the ratio of the Constitution Bench judgment of seven Judges in Bangalore Water Supply case applies to the facts herein. The judgment in Joseph's case, was rendered without reference to former and hence the m .....

he Tribunal has jurisdiction under Section 33-C(2) of the Act? The High Court had held it to be an industry and, therefore, the application was maintainable. On appeal, this Court laid down the tests as under: The term "analogous to the trade or business" could not cut down the scope of the term "industry". The said words can reasonably mean only activity which results in goods made and manufactured or service rendered which are capable of being converted into saleable ones. .....

d purely for the satisfaction of spiritual or psychological urges of persons rendering those services would be excluded. Whenever an industrial dispute would arise between either employers and their workmen or between workmen and workmen, it should be considered an area within the sphere of "industry" but not otherwise. In other words, the nature of the activity will be determined by the conditions which give rise to the livelihood of the occurrence of such disputes and their actual oc .....

are carried out by governmental agencies or Corporations are treated by the Act itself as within the sphere of industry. If express rules under other enactments govern the relationship between the State as an employer and its servants as employees, it may be contended on the strength of such provisions that a particular set of employees are outside the scope of the Industrial Disputes Act. The State today increasingly undertakes commercial functions and economic activities and services as part o .....

n Section 2(j) is far too policy-oriented to be satisfactorily settled by judicial decisions. The Parliament must step in to legislate in a manner which will leave no doubt as to its intention. That alone can afford a satisfactory solution to the question which has agitated and perplexed the judiciary at all levels. Hospital Mazdoor Sabha was correctly decided insofar as it held that the JJ Group of Hospitals was an industry but the same cannot be said in regard to the view of the Court that cer .....

activity is undertaken by the State, and further, if so, whether it is undertaken in fulfilment of the State's constitutional obligations or in discharge of its constitutional functions. In fact, to concede the benefit of an exception to the State's activities which are in the nature of sovereign functions is really to have regard not so much to the nature of the activity as to the consideration who engages in that activity; for, sovereign functions can only be discharged by the State an .....

self in the exercise of its inalienable functions. If the water supply and sewerage schemes of fire fighting establishments run by a Municipality can be industries, so ought to be the manufacture of coins and currency, arms and ammunition and the winning of oil and uranium. The fact that these latter kinds of activities are, or can only be, undertaken by the State does not furnish any answer to the question whether these activities are industries. When undertaken by a private individual they are .....

can be an industry even though these activities are, ought to be and can only be undertaken by the State in the discharge of its constitutional obligations or functions. The State does not trade when it prints a currency note or strikes a coin. And yet, considering the nature of the activity, it is engaged in an industry when it does so. A systematic activity which is organised or arranged in a manner in which the trade or business is generally organised or arranged would be an industry despite .....

ritable motive. The status or capacity, corporate or constitutional, of the employer, would have, if at all, closer nexus, than his motive on the question whether the activity is an industry. The motive which propels the activity is yet another step removed and ex hypothesi can have no relevance on the question as to what is the nature of the activity. It is never true to say that the nature of the activities is charitable. The subjective motive force of an activity can be charity but for the pu .....

this : the twin consideration of profit motive and capital investment is irrelevant for determining whether an activity is an industry. Therefore, activities which are dominated by charitable motives either in the sense that the profits which they yield are diverted to charitable purposes, are not beyond the pale of the definition of Section 2(j). It is as much beside the point to inquire who is the employer as it is to inquire, why is the activity undertaken and what the employer does with the .....

profession like that of an Attorney within the ambit of the definition of 'industry". In Hospital Mazdoor Sabha the Court while evolving a working principle stated that an industrial activity generally involved, inter alia, the co-operation of the employer and the employees. That the production of goods or the rendering of material services to the community must be the direct and proximate result of such co-operation is a further extension of that principle and it is broadly by the appl .....

limitation ought to be read into it, one must stop at a point beyond which the definition will skid into a domain too rarefied to be realistic. Whether the co-operation between the employer and the employee is the proximate cause of the ultimate product and bears direct nexus with it is a test which is almost impossible of application with any degree of assurance or certitude. It will be as much true to say that the Solicitor's Assistant, Managing Clerk, Librarian and the Typist do not dire .....

oyee, until such time as the Legislature decides to manifest its intention by the use of clear and indubious language. Beside the fact that this Court has so held in National Union of Commercial Employees the Legislature will find a plausible case for exempting the learned and liberal professions of Lawyers, Solicitors, Doctors, Engineers, Chartered Accountants and the like from the operation of industrial laws. But until that happens, in the present state of the law it is difficult by judicial .....

e benefit of its services and that even after the admission of guests, the club remains a members' self-serving institution does not touch the core of the problem. (1) 'Industry' as defined in Section 2(j) and explained in Banerji's case has a wide import. I. (a) Where (i) systematic activity, (ii) organised by co-operation between employer and employee (the direct and substantial element is chimerical); (iii) for the production and/or distribution of goods and services calculate .....

yee relations. (d) If the organisation is a trade or business it does not cease to be one because of philanthropy animating the undertaking. II. Although Section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. (a) 'Undertaking' must suffer a contextual and associational shrinkage as explained in Banerji and in this judgment; so also, service, calling and the like. This yields the interference that all organised activity pos .....

een employer and employee, may be dissimilar. It does not matter, if on the employment terms there is analogy. III. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or inner sense of incongruity or outer sense of motivation for or resultant of the economic operations. The ideology of the Act being industrial peace, regulation and resolution of industrial disputes between employer and workmen, the range of this statutory ideology must inf .....

on if, in simple ventures, substantially and going by the dominant nature criterion, substantively no employees are entertained but in minimal matters, marginal employees are hired without destroying the non-employee character of the unit. (c) If, in a pious or altruistic mission, many employ themselves, free or for small honoraria or like return, mainly drawn by sharing in the purpose or cause, such as lawyers volunteering to run a free legal services clinic or doctors serving in their spare ho .....

IV. The dominant nature test: (a) Where a complex of activities, some of which qualify for exemption, others not, involves employees on the total undertaking, some of whom are not 'workmen' as in the University of Delhi case or some departments are not productive of goods and services if isolated, even then, the predominant nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur, will be the true test. The whole undertaking will be & .....

tion 2(j). (d) Constitutionally and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby. 5. It is not necessary to refer to the dissenting judgment. Beg, C.J. in his concurring judgment, at page 221, Placitum E to G , has held thus: I would also like to make a few observations about the so-called "sovereign" functions which have been placed outside the field of industry. I do not feel happy about the use .....

Republic where the citizen shares the political sovereignty in which he has even a legal share, however small, inasmuch as he exercises the right to vote. What is meant by the use of the term "sovereign", in relation to the activities of the State, is more accurately brought out by using the term "governmental" functions although there are difficulties here also inasmuch as the Government has entered largely now fields of industry. Therefore, only those services which are gov .....

s Court had pointed out that the definition of the word 'industry' is very comprehensive. It is in two parts. It is not necessary that an activity of the Corporation must share the common characteristics of an industry before it can come within the statutory definition. The words of Section 2(14) of the City of Nagpur Corporation Act which is equivalent to Section 2(j) of the Act, are clear and unambiguous. The wide definition, however, cannot include the regal, primary and inalienable f .....

characteristic of an industry in a modern State. It was, therefore, incorrect to say that only such activities as were analogous to trade or business could come within Section 2(14) of the Act". "When a service rendered by a Corporation as an industry, the employees of the departments connected with the service, whether financial, administrative or executive, would be entitled to the benefits of the Act". 7. In 1960's and 1970's, there were parallel stream of thinking bein .....

6 of the Constitution. In Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi (1975)ILLJ399SC , break-through was effected by a Constitution Bench in considering whether the Oil and Natural Commission, the Industrial Financial Corporation or the Life Insurance Corporation is an 'authority' within the meaning of Article 12 of the Constitution and whether the employees working in the Corporation are entitled to the protection of judicial review under Article 14. It was answered in favour o .....

s controlled and restricted by the statute which created them and the rules and regulations framed thereunder. Any action of such bodies in excess of their power or in violation of restrictions placed on that power is ultra vires. Thus, the corporate veil given in Praga Tools case (1969)IILLJ479SC , was torn apart and their actions were made amenable to judicial review. In Ajay Hasia v. Khalid Mujib Sehravardi (1981)ILLJ103SC , another Constitution Bench had held that having regard to the Memora .....

ousing Corporation v. Vijay Narain Vajpayee , this Court laid the test to determine as to when a Corporation can be said to be instrumentality or agency of the Government. The test of deep and permissive control was laid down thereunder. It was held that the statutory authorities are amenable to writ jurisdiction being an instrumentality or an authority under the State within the meaning of Article 12 of the Constitution. It was further held that the Corporation may be an authority and, therefor .....

ns and his explanation was sought and to indicate his evidence, if any. He had expressed his intention to cross-examine certain witnesses as also to examine some others in defence. Without taking any action on the respondent's request, the appellant passed an order dismissing him from service w.e.f. the date of his suspension. In the writ petition filed by him, the High Court quashed the order and directed his reinstatement with full back-wages. This Court, on these facts, had held that &quo .....

thout conducting an enquiry and without an opportunity to lead evidence for the proposed punishment given to the respondent, was bad in law. Therefore, the appeal was dismissed and the judgment of the High Court was upheld. Chinappa Reddy, J. in his concurring judgment had held that there is hardly any distinction, on the principle, between a person directly under the employment of the Government and a person under the employment of an agency or instrumentality of the Government or a Corporation .....

im the protection of Articles 14 and 16 of the Constitution. Rajasthan State Electricity Board, Jaipur v. Mohal Lal (1968)ILLJ257SC is also a case of the Rajasthan State Electricity Board questioning whether it is an authority under Article 12 of the Constitution. It was held by a Constitution Bench that it is an authority under Article 12 or instrumentality of the State. In D.I.C. v. D.T.C. Mazdoor Congress: (1991)ILLJ395SC , the question arose whether D.T.C. is an instrumentality under the Sta .....

he Railway establishment cannot be dispensed with except in accordance with the procedure established and unless the essential steps of procedural fairness are adhered to. Central Inland Water Transport Corporation Ltd. v. Brojonath Ganguli: (1986)IILLJ171SC , a Bench of two Judges of this Court reiterated the same view giving extended interpretation and making available the constitutional remedy under Article 226 of the Constitution. In Air India Statutory Corporation v. United Labour Union (19 .....

on aggregate or Corporation sole is not of sole material relevance to decide whether it is by or under the control of the appropriate Government under the Act. (2) If it is a statutory Corporation, it is an instrumentality or agency of the State. If it is a company owned wholly or partially by a share capital, floated from public exchequer, it gives indicia that it is controlled by or under the authority of the appropriate Government. (3) In commercial activities carried on by a Corporation esta .....

appropriate rules or regulations should be consistent with and subject to the same public law principles and limitations. (7) Though the instrumentality, agency or person conducts commercial activities according to business principles and are separately accountable under their appropriate Bye-laws or Memorandum of Association, they become the arm of the Government. (8) The existence of deep and pervasive State control depends upon the facts and circumstances in a given situation and in the alter .....

icles of Association. (11) The instrumentality, agency or person renders an element of public service and is accountable to health and strength of the workers, men and women, adequate means of livelihood, the security for payment of living wages, reasonable conditions of work, decent standard of life and opportunity to enjoy full leisure and social and cultural activities to the workmen. (12) Every action of the public authority, agency or instrumentality or the person acting in public interest .....

their actions. 8. It was directed that since the workman were employed by the contractor, on abolition of the contract labour system, the appellant-Corporation being an instrumentality, even in the private field of contract, was bound by the essential principles of justice, equity and fair procedure and equality. In Bangalore Water Supply Board case (1978)ILLJ349SC , the Board was held to be an 'industry' and the action was amenable to adjudication under the Contract Labour (Regulation .....

6, as the case may be. The remedy of judicial review to every citizen or every person has expressly been provided in the Constitution. It is a fundamental right of every citizen. In the absence of statutory /administrative instruction in operation, the remedy of reference under Section 10 of the Act is available. Therefore, two streams, namely, remedy under the Act by way of reference and remedy of judicial redressal by way of proceedings under Article 226 or a petition filed before the Administ .....

ower to dismiss the employee/workman with one month's notice or pay in lieu thereof, and/or payment of retrenchment compensation under the Act. The security of tenure would be in great jeopardy. The employee would be at the beck and call of the employer, always keeping his order of employment in a grave uncertainty and in a fluid state like demorcus's damocle's sword hangs over the neck. On the other hand, if the interpretation of providing efficacious remedy under Article 226 gives .....

d, all the conditions laid therein would become applicable to the employees with a fixity of tenure and guarantee of service, subject to disciplinary action. His removal should be in accordance with the just and fair procedure envisaged under the Rules or application of the principles of natural justice, as the case may be, in which event the security of the tenure of the employee is assured and the whim and fancy and vagary of the employer would be deterred and if unfair and unjust action is fo .....

lem in T. Joseph's case AIR 1996 SCW 1365 T. Joseph's case was a case relating to the departmental employee whose services was dispensed with. Considering the rules in operation in that behalf, it was held that the Telephone Department is not an industry. The appointment orders were given under the rules. In that behalf, it was held that India is a Sovereign, Socialist, Secular Democratic Republic. It has to establish an egalitarian social order under the rule of law. The welfare measure .....

. Sharma CA No. 2663/97 decided on April 8, 1997 AIR 1997 SCW 1594 the question was whether the appellant who conducted research in a scientific laboratory was a 'workman' and the institution an 'industry'. Since the service conditions regulate conditions of employment, the Tribunal was devoid of jurisdiction to entertain the application under the Act for deciding the dispute. Following the judgment in T. Joseph's case and distinguishing a judgment of three-Judge Bench, it wa .....

artment is not an industry and the Rules governing the conditions of service of the employees stand attracted and thereby the remedy under Article 226 would be available. To that area, the Act does not stand attracted. The respondents admit that the dismissed workmen who were holding civil post, by necessary implication, were excluded as workmen under Section 2(s). Even though the activities of the Corporation partake the character of a private enterprise, since the workmen engage themselves in .....